Tax whistleblower news summary for week of June 2

A U.S. Tax Court ruling this week keeps alive an IRS whistleblower case seeking a $9 million whistleblower reward. The whistleblower claims the IRS recovered $30 million as a result of information the whistleblower provided to the IRS. (United States Tax Court, Whistleblower 10949-13W)

Tax whistleblower news summary for week of May 19

Credit Suisse has agreed to pay $2.6 billion to the U.S. government, the highest fine ever paid in a criminal tax case by a bank. Credit Suisse pleaded guilty to helping U.S. taxpayers file false claims and evade taxes. Credit Suisse admitted to destroying documents and setting up fake accounts to help U.S. citizens avoid taxes. Another story: “Credit Suisse Fined $2.5 billion After Pleading Guilty to U.S. Tax Charge.”

The U.S. Tax Court will allow three IRS whistleblowers to remain anonymous as they appeal IRS decisions about their rewards. Two of the whistleblowers are allowed to maintain the seal on their complaints -- meaning their identities aren’t publicly known – because the judge agreed their fear of physical repercussions is justified. The third whistleblower argued that his identity should remain confidential to prevent financial retribution by the defendant. 

Tax whistleblower news summary for week of May 12

Credit Suisse, which has been under investigation by the Department of Justice, may pay up to a $2 billion fine to resolve charges of tax evasion. (Reuters)

Tax whistleblower news summary for week of May 5

A former Credit Suisse employee pleaded guilty to helping wealthy American clients hide untaxed income in Swiss bank accounts. U.S. authorities continue putting pressure on Credit Suisse to plead guilty to the same charges. (Reuters)

The IRS is investigating Caterpillar Inc.’s overseas transactions that saved the company over $2 billion in taxes from 2000 to 2012. (Bloomberg)

Lifetime Achievement Award for whistleblower work given to Mary Louise Cohen

The Taxpayers Against Fraud Education Fund honored Phillips & Cohen partner Mary Louise Cohen with the Lifetime Achievement Award for her work on whistleblower cases.

Cohen is responsible for “bringing some of the first and largest (False Claims Act) cases ever won or settled,” said TAFEF in an announcement Oct. 24, including a $302 million settlement against Quest Diagnostics. TAFEF called Cohen a “pioneer of False Claims Act litigation” who brought some of the first “qui tam” (whistleblower) cases and some of the largest ever won or settled.

Phillips & Cohen’s cases have helped the government recover over $11 billion in civil settlements and related criminal fines, making it the most successful law firm representing whistleblowers in the U.S.

Grassley urges IRS commissioner-nominee to change anti-whistleblower culture

Sen. Charles Grassley (R-IA), a long-time champion of whistleblowers and the creator of the IRS whistleblower program, has sent a letter to IRS commissioner nominee, John Koskinen, expressing hope that he will change the anti-whistleblower culture at the IRS.

Grassley is concerned that the IRS whistleblower program is being underutilized and harmed due to the dearth of whistleblower rewards and IRS agents’ reluctance to “fully utilize the whistleblower’s knowledge and expertise to identify and expose tax cheats.”

Whistleblowers often put their careers in jeopardy by coming forward with valuable information. Those who have filed whistleblower claims or are considering filing whistleblower claims have been discouraged by the lack of response from the IRS.

Grassley recommends changes to the IRS whistleblower program: Assurances that whistleblowers will be valued and treated fairly, regular use of the awards programs, encouraging rather than discouraging whistleblowers to come forward, and showing whistleblowers that it is worth risking their careers to report those who violate or skirt tax laws and regulations.

Investment officer goes to prison for creative, fraudulent tax shelter

A Virginia investment firm officer who thought he found a creative way to defraud the IRS was sentenced to 54 months in prison yesterday for implementing a fraudulent tax shelter for KPMG clients.

 

Michael Parker, chief operating officer of TransCapital Corp., promoted and implemented from 1998 through 2006 a tax shelter called the Sale Leaseback of Tenants Improvements Strategy (SLOTS), ultimately helping client corporationss to deduct more than $240 million from their corporate income tax returns.

Parker, working with others, formed single purpose entities to buy leasehold improvements from the SLOTS clients. These leasehold improvements were appraised in such a way to reflect a higher value on the clients’ books than the sale price.

Parker admitted that he conspired to defraud the IRS and withheld information about the transactions from his clients. At least eight SLOTS shelters were transacted for corporate clients. The Kroger Co. was identified as having done the largest transaction, claiming over $178 million in deductions.

           

Parker said the SLOTS transactions were simply devices to conceal financing deals.  Schemes to manufacture deductions continue to be a high-risk-shelter strategy.